Fixed Assets

A fixed asset is a long-term physical asset that a company uses in its business operations. The term ‘fixed’ means that the asset cannot be easily liquidated or sold. Fixed assets are also known as capital assets or property, plant, and equipment (PP&E).

Some examples of fixed assets include land, buildings, machinery, vehicles, and furniture. These assets are typically recorded on a company’s balance sheet under the heading ‘Property, Plant, and Equipment.’

The cost of fixed assets is spread out over their useful life through a process called depreciation. This method of accounting recognizes the gradual wear and tear of these assets and allows businesses to recover some of the costs associated with them.